The state of the Bitcoin network and its associated cryptocurrency? Strong and getting stronger, it would seem.
On July 9th, cryptoverse stakeholders watched as it became harder than ever before to mine on the genesis blockchain, Bitcoin’s mining difficulty rate having spiked to over 9 trillion hashes per second (T) for the first time during the day’s early hours.
The development comes amid that rate uptrending since the beginning of the year — the waning weeks of last year’s cryptoeconomy bear market saw Bitcoin’s mining difficulty sink as low as 5 T. The rate’s all-time high in 2018 had been around 7.5 T, a former peak that was crossed again on May 30th, 2019.
The ascension has continued to date, with the difficulty of winning bitcoin mining rewards once more reaching unprecedented heights as of this week.
Moreover, the rate’s climb is expected to continue. As of Tuesday, bitcoin mining pool BTC.com has projected BTC mining difficulty will hit over 10.3 T later this month.
If that projection were to actualize, the difficulty rate — which self-adjusts approximately every two weeks, namely after lots of 2,016 blocks — would have spiked by more than 14 percent from its current position.
A Mining Boom in Our Midst
To be sure, the growth indicates that new miners are joining the network in droves, as mining difficulty grows in kind as more miners come online.
That dynamic matches with comments made last month by Steven Mosher, marketing and sales lead with mining company Canaan Creative. At the time, Mosher noted his company had seen an acute explosion of demand for mining hardware that was then outpacing supply.
“It looks like a return to the 2017 Q3 [and] Q4 conditions, where demand was three times the supply,” he said.
For example, plenty of ASIC hardware will be needed by miner startup Plouton Mining, which announced plans in June to open up a 50 acre solar-powered bitcoin mining site in the California desert.
Worth Noting: Bitcoin Dominance Rate Pushing Up, Too
In the summer of 2017, the BTC dominance rate — the bitcoin market cap’s share of the entire cryptoeconomy’s market capitalization — plummeted to the unprecedented low of 39 percent.
At the time, many thought the prospects of the top altcoins had never seemed higher. But in the wake of the 2018 bear market, it’s been bitcoin that has come out enjoying renewed dominance, with the BTC dominance rate now at 63 percent — the highest it’s been since April 2017 before that year’s bull run ripped into gear.
That reality has reinforced the belief held by some in the space that after the 2017 cryptoverse bubble many token projects would never recover. In other words, bitcoin has remained king of the hill as smaller projects have waned.
The renewed optimism around the OG cryptocurrency has been reflected in its price as of late. Hovering around $12,500 at press time, bitcoin is now up 88 percent on the year, up 139 percent over the last three months, and up 1,928 percent over the last five years.
It’s this performance record — one that’s been uncorrelated with traditional markets and more impressive than the recent performance of safe haven assets — that have more people saying bitcoin is a proper safe haven asset itself.
So what happens next? Steadily increasing amounts of institutional involvement would be a fair guess. CME Group’s bitcoin futures contracts have seen impressive and growing volume lately, and Bakkt — the long-waited crypto exchange being backed by the owner-operators of the NYSE — will begin trialing its own bitcoin futures product this month.
Such increased institutional involvement could serve to lend to Bitcoin’s mining difficulty and dominance rate for the foreseeable future. Alas, its mainstream legitimization as a commodity could end up making Bitcoin that much more dominant.
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